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Friday, May 17, 2013

DOI Releases Updated Proposed Fracking Safety Standards

May 16: The Department of the Interior (DOI) announced the release of an updated draft proposal that would establish what they indicated were "commonsense safety standards" for hydraulic fracturing (or fracking) on public and Indian lands. Following the release of an initial draft proposal in 2012, Interior received extensive feedback, including over 177,000 public comments that helped inform the updated draft proposal. The new proposal maintains important safety standards, improves integration with existing state and tribal standards, and increases flexibility for oil and gas developers. The updated draft proposal will be subject to a new 30-day public comment period.

DOI Secretary Sally Jewell said, "As the President has made clear, this administration's priority is to continue to expand safe and responsible domestic energy production. In line with that goal, we are proposing some commonsense updates that increase safety while also providing flexibility and facilitating coordination with states and tribes. As we continue to offer millions of acres of America's public lands for oil and gas development, it is important that the public has full confidence that the right safety and environmental protections are in place." DOI indicated that approximately 90 percent of wells drilled on Federal and Indian lands use hydraulic fracturing, but the Bureau of Land Management's (BLM) current regulations governing hydraulic fracturing operations on public lands are more than 30 years old and were not written to address modern hydraulic fracturing activities. The revised proposed rule will modernize BLM's management of hydraulic fracturing operations, and help to establish baseline environmental safeguards for these operations across all public and Indian lands.

DOI indicated that the updated draft proposal maintains the three main components of the initial proposal: requiring operators to disclose the chemicals they use in fracturing activities on public lands; improving assurances of well-bore integrity to verify that fluids used during fracturing operations are not contaminating groundwater; and confirming that oil and gas operators have a water management plan in place for handling fluids that flow back to the surface. Building on preliminary input from key stakeholders and recommendations from the Department of Energy (DOE) Secretary's Advisory Board in 2011, the BLM proposed a draft rule in 2012 that took into account technologies already in use by companies to protect water resources, and existing methods for improving transparency through disclosure of the chemicals used in fracturing fluids [See WIMS 5/4/12].

The updated draft proposal addresses many of the more than 177,000 public comments that the BLM received during the initial 120-day public comment period that ended last fall, as well as other feedback received during eight forums and other meetings held with representatives of American Indian tribes. BLM Principal Deputy Director Neil Kornze said, "We know from experience that hydraulic fracturing and horizontal drilling methods can be used safely and effectively, employing many of the best management practices reflected in this draft rule. Our thorough review of all the comments convinced us that we could maintain a strong level of protection of health, safety, and the environment while allowing for increased flexibility and reduced regulatory duplication."

DOI indicated that the supplemental proposal being released revises the array of tools operators may use to show that water is being protected, and provides more guidance on trade secret disclosure, while providing additional flexibility for meeting these objectives. While the revised draft seeks to establish baseline environmental safeguards across all public and Indian lands, it also complements efforts of several states that are regulating hydraulic fracturing, including Colorado, Wyoming, North Dakota, and Texas. The proposal includes a variance process that allows for deferring to states and tribes that already have standards in place that meet or exceed those proposed by this rule.

Although the BLM is not proposing a material change in the provision that allows hydraulic fracturing flowback fluids to be stored either in tanks or in lined pits, the BLM is seeking comments on the costs and benefits of requiring flowback fluids to only be stored in closed tanks. A 30-day comment period begins when the proposed rule is published in the Federal Register. DOI indicated that once comments on the updated draft have been collected and analyzed, the BLM expects to issue a final rule that will ensure that operators apply proven cost-effective safety and environmental protection processes when engaging in hydraulic fracturing on public and Indian lands.

U.S. Senator Lisa Murkowski (R-AK), Ranking Member of the Senate Energy and Natural Resources (ENR) Committee said, "It's my belief that the states are prudently regulating hydraulic fracturing, and that BLM's revised rule should closely track state regulations. Federal regulators seem to acknowledge as much by asking for comments on a process that would allow drilling companies to follow state and tribal regulations that meet or exceed those proposed by this rule. While I'm still reviewing the full rule, it appears BLM has addressed some of the concerns, but we still must guard against duplicative and potentially contradictory regulations."

The Natural Resources Defense Council (NRDC) President Frances Beinecke issued a statement commenting on the proposed rules saying, "These rules protect industry, not people. They are riddled with gaping holes that endanger clean, safe drinking water supplies for millions of Americans nationwide. They also put the fate of millions of acres of America's last remaining wild places in jeopardy. With fracking already moving full steam ahead on federal lands, we need protective ground rules for communities and the environment. Instead, this draft is a blueprint for business-as-usual industrialization of our landscapes. The administration has a responsibility to be a leader in guarding against the risks of fracking. They must shift the direction away from industry wish lists and toward drinking water protection. That means addressing the major shortfalls in this draft before issuing a final rule, and preventing expanded fracking from moving forward unless and until sufficient safeguards are in place."

Michael Brune, Executive Director of the Sierra Club, issued a statement saying, "The Sierra Club is alarmed and disappointed by the fundamental inadequacy of the Bureau of Land Management's new proposed fracking regulations. After reviewing the draft rules, we believe the administration is putting the American public's health and well-being at risk, while continuing to give polluters a free ride. The draft BLM rules ignore the recommendations of the president's own shale gas advisory committee, which called for transparency, full public chemical disclosure, environmental safeguards, and pollution monitoring.

"Although no amount of regulation will make fracking acceptable, the proposed BLM rules fail even to take obvious steps to make it safer. This proposal does not require drillers to disclose all chemicals being used for fracking and continues to allow trade-secret exemptions for the oil and gas industry. There is no requirement for baseline water testing and no setback requirements to govern how close to homes and schools drilling can happen. The new rules also continue to allow the use of toxic diesel fuel for fracking, as well as open pits for storing wastewater -- two practices that we know to be environmentally hazardous. If President Obama honestly wants to tackle climate change, then he must look for every opportunity to keep dirty fossil fuels in the ground and to double down on clean energy solutions like wind, solar, and energy efficiency. The last thing we should be doing is opening up still more public land to drilling and fracking."

Erik Milito, the American Petroleum Institute (API) director of upstream and industry operations questioned the Bureau of Land Management's proposed rules. He indicated that rigorous state rules and state-based tools, such as FracFocus.org, are already in place to ensure responsible oil and natural gas development. He said, "States have led the way in regulating hydraulic fracturing operations while protecting communities and the environment for decades. While changes to the proposed rule attempt to better acknowledge the state role, BLM has yet to answer the question why BLM is moving forward with these requirements in the first place. The production of oil and natural gas from shale and tight sand formations is the most significant development in U.S. energy in generations. Confusing the regulatory system would stand in way of economic growth, job creation and the opportunity to generate billions in revenue for federal, state and local governments. We urge the administration and Congress to take a close look at this and other regulatory actions regarding oil and natural gas development. Smart energy policy will position the U.S. to be the world leader in energy development and realize the economic and energy security benefits of that leadership."

Karen Harbert, president and CEO of the U.S. Chamber's Institute for 21st Century Energy commented saying, "BLM's rule is a solution in search of a problem. States are much better suited to regulate hydraulic fracturing and have done an effective job. The new rule is duplicative to state regulation and the Department of Interior's rule fails to provide a credible rationale as to why another set of regulations are needed. Given that over three quarters of federal lands onshore are already off limits to exploration thanks to this Administration, this draft rule will make what little remains even more expensive and less feasible. This effort by the Administration comes at a time when America should be taking greater advantage of our natural resources to create jobs and improve our economy. Even more troubling, it could be a harbinger for things to come by setting the stage for regulation on private and state lands as well. "

National Association of Manufacturers (NAM) Vice President of Energy and Resources Policy Ross Eisenberg commented saying, "While we appreciate that BLM has acknowledged our concerns with the previously deeply flawed regulations, we are disappointed by the decision to still move forward with new regulations that could negatively impact a significant energy source for manufacturers. States have long been the primary regulators of hydraulic fracturing, and right now they are hard at work updating their regulations to protect public health and the environment. Rather than duplicate the states' efforts with a one-size-fits-all federal rule, we believe BLM should first work with states to identify any potential gaps or deficiencies and if any exist, help the states fix them. Reactive federal regulations can harm gains resulting from increased exploration of shale oil and gas. Limiting the comment period for this rule to only 30 days is simply not enough time to evaluate such complex regulations. . . Government policies should encourage development of these resources, and we fear that poorly-crafted regulations could accomplish the opposite. . ."

Access a release from DOI (click here). Access the prepublication Federal Register notice of Supplemental Notice of Proposed Rulemaking and Request for Comment (click here). Access a release from Sen. Murkowski (click here). Access a release from NRDC (click here). Access a release from Sierra Club (click here). Access a release from API (click here). Access a release from the U.S. Chamber(click here). Access a release from NAM (click here). [#Energy/Frack]